Cities fear loss of gas tax revenue to county

In this file photo, Stine Fulton of Ocala pumps gas into his pickup truck at the BP gas station near the intersection of Northwest Blitchton Road and Northwest 38th Avenue in Ocala, Fla., on Monday, February 28, 2011.

Published: Sunday, January 20, 2013 at 6:30 a.m.

Last Modified: Saturday, January 19, 2013 at 10:10 p.m.

Correction: County Commissioner Carl Zalak said it was "silly" to expect there would be no change in the gas tax allocation. The attribution was incorrect in earlier version of this article.

Facts

Big money

Local governments count on gas tax revenue. Here's how much each received during 2011-12 alone.

• Marion County: $14,355,60

• Ocala: $4,812,532

• Belleview: $524,259

• Dunnellon: $524,259

• Reddick: $131,065

• McIntosh: $131,065

The share of gas tax revenue that Marion County government doles out to the five municipalities within its borders has a significant effect on those cities' budgets.

Representatives from Ocala, Belleview, Dunnellon, McIntosh and Reddick say cuts in their shares could create budget holes that lead to major staff layoffs — or worse.

The cities have asked that the current rates stay in place. But County Commissioner Carl Zalak said it would be “silly” to think there would be no change.

The commission is including the cities in its ongoing discussion about this issue. A major meeting was held last week.

Under the current schedule, the county gets 70.1 percent of the revenue. Ocala gets 23.5 percent; Belleview and Dunnellon each receive 2.56 percent; and McIntosh and Reddick each receive 0.64 percent.

All of the proposed changes call for the county's share to significantly increase — and, by extension, for the cities' shares to drop.

Bryant said a way must be found to maintain the roads in Marion County. She said the county maintains 3,000 miles of roads compared with Ocala's 300 miles, Belleview's 30 miles, Dunnellon's 20 miles, Reddick's 13 miles and McIntosh's 9 miles.

This discussion is prompted by the calendar: The First Local Option Gas Tax, a 6-cent tax, will sunset in August. That tax has been in effect for 30 years. The County Commission has to approve a new ordinance by July 1 that would authorize continued collection of the tax.

Also expiring in August are the interlocal agreements the county signed with each of the cities outlining the division of the tax receipts.

When it reviewed the percentages each municipality receives, the county could find no formula. The same percentages are also applied to two other gas taxes the county collects:

One, for 5 cents per gallon, was passed three years ago to pay off road project bonds and will run until the end of 2039.

The other, called the Ninth-Cent Fuel Tax, is a 1-cent tax that was approved in 1989. Unlike the other two, the county is under no obligation to share the proceeds of the 1-cent tax, although it historically has done so.

McIntosh Attorney Brent Baris said his bedroom community does not have the businesses to support the community's needs. The 0.64 percent of gas tax revenue it receives amounts to 60 percent of the McIntosh budget.

He said the people in McIntosh do not have public transportation. It's a long drive to a grocery store, which takes a lot of gas. That causes McIntosh's residents to pay a disproportionate share of gas taxes, Baris said.

Belleview Mayor Christine Dobkowski said her city uses the funds to buy equipment, fill sinkholes and pave streets.

“The city of Belleview has made good decisions,” Dobkowski said.

She said it has set aside some of its gas tax money, accumulating enough to take on larger projects.

Dobkowski asked if the county would pick up the roadwork Belleview could no longer afford if its allocation were cut.

Ocala City Councilwoman Suzy Heinbockel said that for the past three years Ocala has approved a budget at the rolled-back rate, which means it collects the same amount of taxes each year and operates on that money. She said the county has not kept to the rolled-back rate but has kept its rate flat.

“This now seems to be falling on the backs of the municipalities,” Heinbockel said.

Ocala City Councilman Daniel Owen said the cities are the hubs of Marion County. It is where the hospitals, the grocery stores, the schools and the courthouse are located. He said in 2002, the cities agreed to forgo receiving the taxes and let Marion County have the roughly $12 million in order for the county to complete the courthouse expansion.

“A strong Ocala, a strong Belleview, a strong Reddick, a strong Dunnellon and a strong McIntosh mean a strong Marion County,” Owen said. “Do we want McIntosh to go away? Look at the (McIntosh) festival. How many people does that draw?”

He said the population of Ocala increases during the day. That leads to wear and tear on city roads.

“People are going to work. How many people work in Belleview who are not Belleview residents? How many people work in Ocala who are not Ocala residents? How many people work in Dunnellon who are not Dunnellon residents?” Owen asked rhetorically.

He said the roughly 75,000 people who live in the cities are also county residents.

“That's a big chunk,” Owen said.

Dunnellon Mayor Nathan Whitt said his city has fewer than 2,000 residents. But within a 10-mile radius there are about 30,000 to 50,000 people.

“We are surrounded by retirement communities,” Whitt said. “There are more than 20,000 cars going through town every day. Those are not all (Dunnellon) citizens.”

He said the proposed formulas would cut his road budget by 80 percent, and the city would probably lose 40 percent of its staff unless it raised millage rates. He said that because Dunnellon is a small community, many employees do multiple jobs.

He asked that the county set the rate at a revenue-neutral level at least for a year so the cities can assess the situation.

Dunnellon Vice Mayor Dennis Evans asked that, if the county makes changes, it give the cities an opportunity to show what effects those changes would have.

“Hopefully, you will consider your gains and what you can do with the money and compare that with the devastation — and I use that word — to the small municipalities,” Evans said during a meeting on the tax issue last week. “If it ain't broke, don't fix it.”

But County Commissioner Carl Zalak said the county needs a formula that works and is based on facts.

“We have to come up with something that makes sense,” Zalak said. “My obligation to the citizens of Marion County is that we know exactly how that is happening. I think the County Commission is very willing to talk.”

Steve Rogers, president of the Reddick Town Council, asked why none of the formulas presented show Marion County getting less than its current 70.1 percent.

Zalak said the process would be transparent and the county would not stop working with the cities.

“We do have a distribution that has been known for 30 years and is transparent,” Rogers said. “I don't hear anybody objecting to this but Marion County.”

Ocala Mayor Kent Guinn said they talked about no harm being done.

“You know what the right thing to do is, and I trust you will do that,” Guinn said.

McIntosh Council President Frank Ciotti said his city only has three employees: a clerk and two men.

He said if there were cuts, McIntosh could not do plumbing work because one man holds the pipe and the other does the connecting.

“We would really be in trouble,” Ciotti said.

Ocala's Owen asked if a formula could be based on daytime population. But McIntosh's Baris said there are only about 50 people in his town during the daytime hours.

Bryant suggested that all the cities' staffs meet jointly with the county staff to work out an acceptable formula. In the meantime, the county would draw up the ordinance that would give the county the authority to charge the sales tax.

If no formula can be devised to satisfy the county and the cities, state law requires the county to follow a default formula that is based on the amount of money each agency has spent on road maintenance and construction for the past five years.

Dunnellon and Belleview officials both argued that they have not spent all the money they have received because they are setting some money aside each year to use for larger projects.

Assistant County Administrator Mounir Bouyounes said that when the county could find no formula for how the taxes were divided, it looked to see what other counties have done. All the options the county examined resulted in an increase for the county and a decrease for all the cities.

And some of those decreases would be draconian.

It became abundantly clear at last week's meeting that the cities wanted the allocation to remain unchanged — and the county wanted a new formula that it could defend.

<p><i>Correction: County Commissioner Carl Zalak said it was "silly" to expect there would be no change in the gas tax allocation. The attribution was incorrect in earlier version of this article.</i></p><p>The share of gas tax revenue that Marion County government doles out to the five municipalities within its borders has a significant effect on those cities' budgets.</p><p>Representatives from Ocala, Belleview, Dunnellon, McIntosh and Reddick say cuts in their shares could create budget holes that lead to major staff layoffs — or worse.</p><p>The cities have asked that the current rates stay in place. But County Commissioner Carl Zalak said it would be “silly” to think there would be no change.</p><p>The commission is including the cities in its ongoing discussion about this issue. A major meeting was held last week.</p><p>Under the current schedule, the county gets 70.1 percent of the revenue. Ocala gets 23.5 percent; Belleview and Dunnellon each receive 2.56 percent; and McIntosh and Reddick each receive 0.64 percent.</p><p>All of the proposed changes call for the county's share to significantly increase — and, by extension, for the cities' shares to drop.</p><p>Bryant said a way must be found to maintain the roads in Marion County. She said the county maintains 3,000 miles of roads compared with Ocala's 300 miles, Belleview's 30 miles, Dunnellon's 20 miles, Reddick's 13 miles and McIntosh's 9 miles.</p><p>This discussion is prompted by the calendar: The First Local Option Gas Tax, a 6-cent tax, will sunset in August. That tax has been in effect for 30 years. The County Commission has to approve a new ordinance by July 1 that would authorize continued collection of the tax.</p><p>Also expiring in August are the interlocal agreements the county signed with each of the cities outlining the division of the tax receipts.</p><p>When it reviewed the percentages each municipality receives, the county could find no formula. The same percentages are also applied to two other gas taxes the county collects:</p><p>One, for 5 cents per gallon, was passed three years ago to pay off road project bonds and will run until the end of 2039.</p><p>The other, called the Ninth-Cent Fuel Tax, is a 1-cent tax that was approved in 1989. Unlike the other two, the county is under no obligation to share the proceeds of the 1-cent tax, although it historically has done so.</p><p>McIntosh Attorney Brent Baris said his bedroom community does not have the businesses to support the community's needs. The 0.64 percent of gas tax revenue it receives amounts to 60 percent of the McIntosh budget.</p><p>He said the people in McIntosh do not have public transportation. It's a long drive to a grocery store, which takes a lot of gas. That causes McIntosh's residents to pay a disproportionate share of gas taxes, Baris said.</p><p>Belleview Mayor Christine Dobkowski said her city uses the funds to buy equipment, fill sinkholes and pave streets.</p><p>“The city of Belleview has made good decisions,” Dobkowski said.</p><p>She said it has set aside some of its gas tax money, accumulating enough to take on larger projects.</p><p>Dobkowski asked if the county would pick up the roadwork Belleview could no longer afford if its allocation were cut.</p><p>Ocala City Councilwoman Suzy Heinbockel said that for the past three years Ocala has approved a budget at the rolled-back rate, which means it collects the same amount of taxes each year and operates on that money. She said the county has not kept to the rolled-back rate but has kept its rate flat.</p><p>“This now seems to be falling on the backs of the municipalities,” Heinbockel said.</p><p>Ocala City Councilman Daniel Owen said the cities are the hubs of Marion County. It is where the hospitals, the grocery stores, the schools and the courthouse are located. He said in 2002, the cities agreed to forgo receiving the taxes and let Marion County have the roughly $12 million in order for the county to complete the courthouse expansion.</p><p>“A strong Ocala, a strong Belleview, a strong Reddick, a strong Dunnellon and a strong McIntosh mean a strong Marion County,” Owen said. “Do we want McIntosh to go away? Look at the (McIntosh) festival. How many people does that draw?”</p><p>He said the population of Ocala increases during the day. That leads to wear and tear on city roads.</p><p>“People are going to work. How many people work in Belleview who are not Belleview residents? How many people work in Ocala who are not Ocala residents? How many people work in Dunnellon who are not Dunnellon residents?” Owen asked rhetorically.</p><p>He said the roughly 75,000 people who live in the cities are also county residents.</p><p>“That's a big chunk,” Owen said.</p><p>Dunnellon Mayor Nathan Whitt said his city has fewer than 2,000 residents. But within a 10-mile radius there are about 30,000 to 50,000 people.</p><p>“We are surrounded by retirement communities,” Whitt said. “There are more than 20,000 cars going through town every day. Those are not all (Dunnellon) citizens.”</p><p>He said the proposed formulas would cut his road budget by 80 percent, and the city would probably lose 40 percent of its staff unless it raised millage rates. He said that because Dunnellon is a small community, many employees do multiple jobs.</p><p>He asked that the county set the rate at a revenue-neutral level at least for a year so the cities can assess the situation.</p><p>Dunnellon Vice Mayor Dennis Evans asked that, if the county makes changes, it give the cities an opportunity to show what effects those changes would have.</p><p>“Hopefully, you will consider your gains and what you can do with the money and compare that with the devastation — and I use that word — to the small municipalities,” Evans said during a meeting on the tax issue last week. “If it ain't broke, don't fix it.”</p><p>But County Commissioner Carl Zalak said the county needs a formula that works and is based on facts.</p><p>“We have to come up with something that makes sense,” Zalak said. “My obligation to the citizens of Marion County is that we know exactly how that is happening. I think the County Commission is very willing to talk.”</p><p>Steve Rogers, president of the Reddick Town Council, asked why none of the formulas presented show Marion County getting less than its current 70.1 percent.</p><p>Zalak said the process would be transparent and the county would not stop working with the cities.</p><p>“We do have a distribution that has been known for 30 years and is transparent,” Rogers said. “I don't hear anybody objecting to this but Marion County.”</p><p>Ocala Mayor Kent Guinn said they talked about no harm being done.</p><p>“You know what the right thing to do is, and I trust you will do that,” Guinn said.</p><p>McIntosh Council President Frank Ciotti said his city only has three employees: a clerk and two men.</p><p>He said if there were cuts, McIntosh could not do plumbing work because one man holds the pipe and the other does the connecting.</p><p>“We would really be in trouble,” Ciotti said.</p><p>Ocala's Owen asked if a formula could be based on daytime population. But McIntosh's Baris said there are only about 50 people in his town during the daytime hours.</p><p>Bryant suggested that all the cities' staffs meet jointly with the county staff to work out an acceptable formula. In the meantime, the county would draw up the ordinance that would give the county the authority to charge the sales tax.</p><p>If no formula can be devised to satisfy the county and the cities, state law requires the county to follow a default formula that is based on the amount of money each agency has spent on road maintenance and construction for the past five years.</p><p>Dunnellon and Belleview officials both argued that they have not spent all the money they have received because they are setting some money aside each year to use for larger projects.</p><p>Assistant County Administrator Mounir Bouyounes said that when the county could find no formula for how the taxes were divided, it looked to see what other counties have done. All the options the county examined resulted in an increase for the county and a decrease for all the cities.</p><p>And some of those decreases would be draconian.</p><p>It became abundantly clear at last week's meeting that the cities wanted the allocation to remain unchanged — and the county wanted a new formula that it could defend.</p><p><i>Contact Susan Latham Carr at 867-4156 or susan.carr@starbanner.com.</i></p>